SECTION 3.1721. License Application; Fees

(a) Applicant. In this section, "applicant" means a person applying for a life settlement broker or provider license.

(b) License requirements.

(1) A person engaging in business as a life settlement broker or life settlement provider in this state must apply for and obtain a license issued by the department as required by this subchapter, except that:

(A) a person may operate as a life settlement broker without a life settlement broker license if that person has held a life insurance agent license in this state for at least one year and holds an active license, or has held a life insurance agent license in that person's home state for at least one year and is licensed as a nonresident agent in this state. The life insurance agent must notify the department in accord with §3.1725 of this title (relating to Life Insurance Agent Notification) and Insurance Code Chapter 1111A; and

(B) a person may operate as a life settlement broker without a life settlement broker license if that person is a licensed attorney, certified public accountant, or financial planner who is retained in the type of practice customarily performed in a professional capacity to represent the owner and whose compensation for the life settlement transaction is not paid directly or indirectly by the provider or any other person, except the owner.

(2) A life settlement broker or provider is prohibited from concurrently holding more than one license of the same type and in the same legal name.

(3) A life settlement broker or provider subject to the provisions of this subchapter must apply for issuance of the life settlement broker's or provider's license in the life settlement broker's or provider's legal name and may only act within the scope of authority granted by the license. If a person holds a license authorizing the person to act as a life settlement broker or provider, that person need not obtain an additional license to participate in a registered partnership or corporate entity of the same type in this state, but the partnership or corporate entity with which the person participates must apply for and hold, in its own legal name, a separate license to conduct business as a life settlement broker or provider in this state.

(4) A licensed life settlement broker or provider may have additional offices or do business under assumed names, as that term is defined in §19.901 of this title (relating to Definitions Concerning Conduct of Licensed Agents), without obtaining an additional license. However, the life settlement broker or provider must furnish the department with a list identifying any and all offices from which the life settlement broker or provider will conduct life settlement business and showing any and all assumed names that the life settlement broker or provider will utilize in conducting life settlement business at any of those offices.

(A) Where such a filing is required under the Assumed Business or Professional Name Act, Business and Commerce Code Chapter 71, or any similar statute, the life settlement broker or provider must provide the department with a copy of the valid assumed name certificate reflecting proper registration of each assumed name utilized by the life settlement broker or provider.

(B) A life settlement broker or provider doing business under an assumed name must comply with subsection (c)(5) of this section.

(c) Information required with application. In addition to a complete License Application for a Life Settlement Provider or Broker form, an applicant for a license to engage in business as a life settlement broker or provider must submit the items set forth in paragraphs (1) - (7) of this subsection, as follows:

(1) either:

(A) a certificate of account status issued by the Texas Comptroller of Public Accounts reflecting that the applicant is in good standing or temporary good standing; or

(B) a certification signed by an officer or partner of the applicant attesting that the applicant is not subject to Texas Tax Code Chapter 171;

(2) if a provider, a detailed plan of operation, including, but not limited to the following, where applicable:

(A) history:

(i) a brief history of the applicant since its formation, if an entity;

(ii) a list of all states in which the applicant holds a license or registration as a life settlement provider or viatical settlement provider and the date(s) that the applicant obtained such licensure or registration;

(iii) a list of all states in which the applicant is currently doing business, but in which a license or registration is not required; and

(iv) a list and description of any pending lawsuits or judgments naming the applicant as defendant or co-defendant;

(B) management:

(i) evidence that the applicant has a good business reputation, and a detailed description of the experience, training, or education that qualifies the applicant to conduct the business of life settlements as a life settlement provider; and

(ii) if the applicant is a subsidiary of a parent or holding company, an organizational chart showing the relationship between the parent and all affiliated entities. "Affiliate" and "subsidiary" have the meaning assigned by Insurance Code §823.003; and

(C) marketing plan:

(i) a detailed description of the applicant's marketing plan; and

(ii) the applicant's projected volume of business in Texas and nationwide for the first three years after licensure in Texas;

(3) an antifraud plan that meets the requirements of Insurance Code §1111A.022;

(4) a completed Biographical Affidavit form to be used as an attachment to the License Application for a Life Settlement Provider or Broker form for each owner, partner, director, officer, key management personnel, or employee having authority to direct the management of the organization, and any person who has ownership of 10 percent or greater of the applicant or the applicant's stock;

(5) the applicant's legal name, including any assumed name, used by a life settlement broker or provider in the conduct of business under a license is subject to the requirements of §19.902 of this title (relating to One Agent, One License), except that a separate application is not required for a life settlement broker or provider who conducts business under a single assumed name and registers that name with the department on the life settlement broker's or provider's application for license;

(6) if a business entity domiciled in Texas, a current copy of its certificate of status from the Office of the Texas Secretary of State; and

(7) if a business entity not domiciled in Texas:

(A) a current copy of its certificate of good standing from the state of its domicile; and

(B) with the license application, a completed appointment of an agent for service of process, unless the applicant has filed with the department the applicant's written irrevocable consent that any action against the applicant may be commenced by service of process on the commissioner. The applicant must attach the completed form to the application for license. The applicant must appoint as the agent for service of process a person with a Texas address who has an established place of business and who can be easily located and served with notices, legal process, and papers.

(d) Application process.

(1) If an applicant for a license to operate as a life settlement broker or provider has complied with all application procedures in this section, the commissioner will issue the applicant a license to engage in business as a life settlement broker or provider unless the commissioner determines that the application should be denied based on any one or more of the factors set forth in Insurance Code Chapter 1111A.

(2) If the commissioner denies the application and the applicant requests a hearing, or if at any time the applicant no longer meets the requirements for licensure, the procedure for the denial, renewal, revocation, suspension, annulment, or withdrawal of a license is governed by §1.32 of this title (relating to Licenses).

(3) The department will not accept applications that do not contain all required information or certifications.

(e) License fee. An applicant must submit with each completed application for license at the time of filing, a two-year license fee in the amount of $50 for a life settlement broker, or $100 for a life settlement provider. All license fees are nonrefundable and nontransferable, including fees for applications that are denied or incomplete.

(f) Partnership, corporation, or other business entity license. A partnership, corporation, or other business entity may file an application for a license to engage in business as a life settlement broker or provider only if each owner, partner, director, member, officer, and designated employee is named in the application.

(g) Notice of suspension or revocation. A life settlement broker or provider must notify the department of, and must deliver to the department a copy of, any applicable order or judgment not later than the 30th day after the date of the:

(1) suspension or revocation of the life settlement broker's or provider's right to transact business in another state;

(2) receipt of an order or notice of hearing to show cause why the life settlement broker's or provider's license or license in another state should not be suspended or revoked; or

(3) imposition of an administrative or criminal penalty, forfeiture, or sanction on the life settlement broker or provider for the violation of the laws of this state, any other state, or the federal government.

(h) Effect of criminal conduct. An applicant for or holder of a life settlement broker's or provider's license, including each owner, partner, director, member, officer, and any person who has ownership of 10 percent or greater of the applicant or the applicant's stock, is subject to the requirements of Insurance Code §1111A.004 and Chapter 1, Subchapter D, of this title (relating to Effect of Criminal Conduct).

(i) Requirement of additional information. In addition to the information required in this section, the department may ask for other information necessary to determine whether the applicant complies with the requirements of Insurance Code §1111A.003 and this subchapter for purposes of issuing or renewing a life settlement broker's or provider's license. If an applicant does not respond to a request for additional information within 10 days following the date the applicant receives the request, the department will consider the application withdrawn. The applicant can request an extension, but must provide a reasonable basis for the need for additional time.

(j) Material change. If there is a material change to any information provided in the application for license, the life settlement broker or provider must submit written notification of the change to the department not later than 30 days after the date the change occurs, using the Application for Renewal, Surrender, or Change of Information for a Life Settlement Provider or Broker form.

(k) Submission required for existing brokers and providers. A life settlement broker or provider, including one operating under a temporary license or operating under a certificate of authority issued prior to September 1, 2011, must submit an application in accord with this section not later than 30 days after the effective date of this subchapter.

Source Note: The provisions of this §3.1721 adopted to be effective August 1, 2013, 38 TexReg 4357